Facebook agreed to pay a total of $19 billion to acquire WhatsApp, the world’s most popular mobile messaging app.
Although Facebook already offers its own messaging app in the form of Facebook Messenger, the deal will allow it to tap into WhatsApp’s user base which is significantly larger in Europe, Brazil, Russia and China.
WhatsApp now has 450 million monthly active users and is adding around one million new registered users per day. Around 70 per cent of users are active daily and the volume of messages sent and received is approaching the global total for SMS messages.
The deal will see Facebook pay $4 billion in cash and $12 billion in shares, along with $3 billion in restricted stock to be paid to WhatsApp’s founders and employees which will vest four years after the deal closes.
WhatsApp will retain its brand and continue to operate independently under the leadership of co-founder and CEO Jan Koum, who also joins the Facebook board of directors. Facebook Messenger will also continue as a standalone app.
If the deal is not able to take place, Facebook will pay WhatsApp $1 billion in cash and $1 billion worth of shares.
In keeping with its Internet.org initiative, Facebook said the acquisition will help accelerate its “ability to bring connectivity and utility to the world by delivering core internet services efficiently and affordably”.
“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg, Facebook founder and CEO.
In a post on the WhatsApp blog, Koum said that the deal will give the company “the flexibility to grow and expand” and give the team “more time to focus on building a communications service that’s as fast, affordable and personal as possible”.
In the face of the Facebook-WhatsApp deal, it seems that Japanese e-commerce giant Rakuten got somewhat of a bargain last week when it agreed to acquire messaging app Viber for $900 million.
The news also had an impact on BlackBerry which, according to Bloomberg, saw its share price surge by as much as 9 per cent as investors placed greater value on the struggling vendor’s BBM messaging app.